Recommendation 6

The OBR states that its central forecast for the path of inflation could be too low. Since the Budget, inflation has already significantly exceeded the level forecast by the OBR in October. The Bank of England raised interest rates to bring the rate of inflation back towards its two per cent target, and is likely to increase them further. It is therefore likely that by the next economic forecast, the Chancellor may be faced with significantly higher interest costs than those included within the October economic forecast.